How much will be created in the form of deposits and loans

Assignment Help Financial Accounting
Reference no: EM132789887

Question - Suppose that the public wishes to hold $0.25 in pocket money (currency and coin) and $0.20 in time and savings deposits. Suppose that banks wish to hold $0.15 for each new dollar of transaction money received. Suppose that $0.08 finds its way outside the domestic banking system. Suppose the reserve requirement on transaction deposits is 10 percent and that on time and savings deposits is 4%. Show your work below.

a. What is the size of the deposit multiplier?

b. Suppose $5 million in new excess reserves appear in the banking system. How much will be created in the form of deposits and loans?

c. By how much did the leakages of funds from the banking system reduce the size of the transaction deposit multiplier? (Hint: compute the simple transaction deposit multiplier).

Reference no: EM132789887

Questions Cloud

What is the balance after adjustment : If the balance of the Allowance dor doubtful accounts is an $10200 debt before adjustment, what is the balance after adjustment?
Calculate the price elasticity of demand : Daniella tutors English students. She finds that when she charges $5 per hour, students demand a total of 30 hours of tutoring per week.
How would advise abe to streamline the entries : How would you advise Abe to streamline these entries? Abe's Alarms leases a fleet of vehicles with separate payments for each vehicle.
Why is the ability to engage in systems thinking : Why is the ability to engage in systems thinking and contextualization important when it comes to addressing complex problems?
How much will be created in the form of deposits and loans : Suppose $5 million in new excess reserves appear in the banking system. How much will be created in the form of deposits and loans
What type of sampling will you use for the study and why : What type of sampling will you use for this study and why? How many participants will be there? What are your inclusion/exclusion criteria for eligibility?
Product differentiation and monopolistic competition : What is the relationship between product differentiation and monopolistic competition?
What is the ending inventory value for ornamental trees : Rounding up to the nearest cent, what is the ending inventory value for Ornamental Trees and Decorative Spotlights as of October 31 of the current year?
Determine the value of the bond to you : Fingen's 16-year, $1,000 par value bonds pay 8 percent interest annually. Determine the value of the bond to you, given your required rate of return

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the level of its accounts receivable

Greene Sisters has a DSO of 20 days. The company's average daily sales are $20,000. What is the level of its accounts receivable

  How much total amount can the issuer of the note payable

How much total amount can the issuer of the note payable expect to receive? How much is the estimated deficiency to unsecured creditors?

  Qualified small business

In 2000 Ms. Ennis, a head of household, contributed $50,000 in exchange for 500 shares of Sets stock. Seta is a qualified small business. This year Ms. Ennis sold all 500 shares for $117,400.

  What is the NPV of the PJX

Juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the NPV of the PJX5?

  Record the necessary closing entries

Record the necessary closing entries. The year-end adjusted trial balance of Aggies Corporation included the following account balance

  Calculate funds from operations

Calculate funds from operations. Closing balance of p&l account 100000. Non operating expenses and loss 30000.Opening balance of p and l a/c 30000

  Cost of goods manufactured balance in the raw materials

cost of goods manufactured balance in the raw materials inventory account.dasilvia company had only 1 job in process on

  Result of tax planning to reduce taxes

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

  Disclosure of depreciation expense in income

disclosure of depreciation expense in income statement.merton company purchased a building at a cost of 364000 on

  The statement of cash flows

The statement of cash flows and must be prepared on a daily basis and summarizes the operating, financing, and investing activities of an entity

  High-low method-scattergraph

Cubicle Solutions sells productivity software such as word processors, spreadsheets, and personal information managers. Cubicle prides itself on customer support and maintains a large call center where customers can call in with technical question..

  Tsuchiya corporation manufactures

Tsuchiya Corporation manufactures a variety of products. Last year, the company's variable costing net operating income was $87,500.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd